The federal district court in San Juan, Puerto Rico, erred in dismissing copyright infringement, trademark infringement, and state law claims brought by a music contestant against pop recording artist Enrique Martin-Morales (aka Ricky Martin) on the ground that the contest rules compelled arbitration of the claims, the U.S. Court of Appeals in Boston has ruled. Unlike the contest sponsors, Martin was not a party to the contest rules. He also failed to show that he was an intended third-party beneficiary entitled to invoke the arbitration provision (Cortes-Ramos v. Martin-Morales, June 27, 2018, Barron, D.).

In 2013, Sony Music Entertainment, Sony Music Brasil, Sony Pictures Television, Inc., and Sony Electronics, Inc. (collectively "Sony") co-sponsored the "SuperSong" contest, inviting contestants to compose, record, and submit an original musical composition and an accompanying music video. The winning composition was to be sung by pop star Enrique Martin-Morales (aka Ricky Martin) and potentially would be included in the 2014 Federation Internationale de Football Association (FIFA) World Cup Official Album.

Luis Adrian Cortes-Ramos entered the contest by uploading a song and accompanying music video to the contest website. Cortes-Ramos was selected as one of 20 finalists and was asked to sign several documents and return them to Sony. Cortes-Ramos did not win the contest. In April 2014, Martin released a song and music video entitled "Vida," which Cortes-Ramos alleged was similar to the music video he had submitted for the contest. Cortes-Ramos filed suit against Martin in February 2016, asserting claims for violations of the Copyright Act, the Lanham Act, and Puerto Rico law. The district court dismissed all claims pursuant to Federal Rule of Civil Procedure 12(b)(6), on the ground that the claims were subject to the arbitration provision contained in the contest rules Cortes-Ramos agreed to. Cortes-Ramos appealed the dismissal.

On appeal, Cortes-Ramos did not dispute that, as a contestant, he agreed to the terms of the contest's rules, including the arbitration provision, but he contended that the district court erred in dismissing his claims against Martin based on that arbitration provision. The arbitration provision stated, "All actions or proceedings arising in connection with, touching upon or relating to these Official Rules, the breach thereof and/or the scope of the provisions of this Section 6 shall be submitted to [the arbitration provider]."

The First Circuit agreed with Martin. Unlike Sony, Martin was not a party to the contest rules and was not entitled to invoke the arbitration agreement. Martin had filed a separate lawsuit against the Sony parties, which the district court dismissed in 2015, based on the arbitration provision contained in the contest rules. In that case, First Circuit affirmed the dismissal, but later reversed a separate order awarding attorney fees to Sony, clarifying that an order dismissing and compelling arbitration of a plaintiff’s claims does not make a defendant a prevailing party entitled to attorney fees under the Copyright Act.

In this case, Martin alleged that Cortes-Ramos effectively admitted that he was "a sponsor or co-sponsor" of the contest. However, the language in Cortes-Ramos’s complaint merely stated that Martin and Sony "claimed that they were sponsors or co-sponsors" of the contest. Martin made no other argument to show that he was a sponsor or co-sponsor of the contest.

Martin next argued that as an intended third-party beneficiary of the contest rules, he was entitled to invoke the requirement that suits "arising from, touching on, or relating to" the contest's rules be submitted to arbitration. The appeals court disagreed. The First Circuit has previously held that a party claiming third-party beneficiary status arising from an arbitration agreement "must show with special clarity that the contracting parties intended to confer a benefit on him." McCarthy v. Azure, 22 F.3d 351, 362 (1st Cir. 1994).

The arbitration provision in this case did not clearly establish an intent to benefit Martin, according to the court. Instead, the plain language of the provision ("either party" and "neither party") encompassed only disputes between the parties to the agreement to arbitrate. The only "parties" contemplated were the co-sponsors of the contest and the contest entrant. "One presumes that the drafters knew how to refer to Martin if they wished. After all, Martin is seemingly referenced in a different provision in the contest rules," the court said.

The same also was true of the references to Martin that appeared in a release and affidavit of contest eligibility that Cortes-Ramos executed after he was selected a finalist in the contest. Even if these documents were incorporated into the contest rules, as Martin contended, "those references would suggest that Martin may not invoke the arbitration provision precisely because there are many references to him outside of it," the court said. Martin’s argument that he was entitled to invoke the arbitration provision in this case because he "was intrinsically linked to" the contest failed for similar reasons.The order dismissing Cortes-Ramos’s claims was reversed.

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